Business loan is a credit facility offered by Banks and NBFCs to meet the financial requirements of self-employed customers and enterprises. It can be availed by individuals, MSMEs, business owners, entrepreneurs, professionals (CAs/Doctors), and several other business entities.
Business loans are majorly classified into two types, such as secured loans and unsecured loans. Secured loans are types of loans that require collateral/security, that a borrower needs to deposit with the lender to avail a business loan. However, in the case of unsecured loans, there is no need to submit any collateral/security with the bank, NBFC, or any other lender.
Banks/NBFCs offer both secured and unsecured business loans, including Term Loan (Short-term/Long-term), Working Capital Loans, Cash Credit, Overdraft, Letter of Credit, Bill/Invoice Discounting, Equipment Finance, Machinery Loans, POS loans, Loan under Bank Guarantee, Loan under Govt. schemes, etc.
The minimum loan amount offered starts from as low as Rs. 30,000 that can be availed from Small Finance Banks (SFBs), Regional Rural Banks (RRBs), or Micro Finance Institutions (MFIs). Borrowers can avail collateral-free business loans for up to Rs. 1 crore from leading private and public sector banks. Small business loans are also available for MSMEs and Startups at competitive interest rates.
On our online platform, the business loan interest rates offered by financial institutions start from 16% p.a. onwards and are further determined as per the applicant’s profile, eligibility & business requirements. Below mentioned are the business loan interest rates offered by leading banks and NBFCs.
| Bank/NBFC/Fintech | Interest Rate |
| IIFL Finance | 11.75% – 25.75% p.a. |
| HDFC Bank | 11.90% – 21.35% p.a. |
| FlexiLoans | 1% per month onwards |
| ZipLoan | 1% – 1.5% per month (Flat ROI) |
| Axis Bank | 14.25% – 18.50% p.a. |
| IDFC First Bank | 14.50% p.a. onwards |
| Kotak Mahindra Bank | 16% – 19.99% p.a. |
| Fullerton Finance | 17% – 21% p.a. |
| Bajaj Finserv | 17% p.a. onwards |
| RBL Bank | 17.50% – 25% p.a. |
| ICICI Bank | 18% p.a. onwards |
| Indifi Finance | 1.5% per month onwards |
| Lendingkart Finance | 1.5% – 2% per month |
| Tata Capital Finance | 19% p.a. onwards |
| NeoGrowth Finance | 19% – 24% p.a. |
| Hero FinCorp | Up to 26% p.a. |
Interest Rates are updated as on April 2022.
Credit Scores
Credit score plays a significant role in the loan approval process. It represents your credit history along with the repayment timeline of availed funding products. Generally, any credit score of 750 or more is considered good by the financial institutions. However, if your credit score is bit low of 650 or above, there are still chances of loan approval from some NBFCs, Small Finance Banks and Micro Finance Institutions.
The credit score eligibility defined by financial institutions are different for individuals, self-employed professionals, MSMEs, retailers or manufacturers and other business entities.
Different ranges of credit score is required by banks/NBFCs, from borrowers who require various types of business loans, such as term loan, working capital loan, letter of credit, overdraft, POS loans, etc. The credit score range defined by the lender for a specific loan product shall vary from applicant to applicant and loan types.
People with New-to-Credit should also start to build a credit score for loan approvals, as applicants with low credit scores are always at higher risk of loan rejections. Startups require even higher credit scores to avail business loans and they are new to the lending market and are about to set up a new business. Therefore, build and maintain a good credit score to enhance the chance of loan approval.
Eligibility Criteria
- Business Tenure: Minimum 1 year or above
- Minimum Annual Turnover: Rs. 12 lakh or above for existing enterprises
- Credit Score: 750 or above
- Applicants with No past loan defaults
Eligible Entities
- Individuals, Business Owners, Entrepreneurs, Self-employed professionals, Startups and Micro, Small, and Medium Enterprises (MSMEs)
- Private and Public Limited Companies, Sole Proprietorship, Partnership Firms, Limited Liability Partnerships, and Large Enterprises engaged only in Manufacturing, Trading or Services sectors
- NGOs, Co-operative Societies, Trusts and professionals, such as CAs, Doctors, Architects, Company Secretaries, Designers, etc.
Documents Required
When applying for a business loan, you will need to submit the following documents:
- Duly filled application form along with passport-sized photographs
- KYC Documents of the applicant, including PAN card, Passport, Aadhar Card, Driving License, Voter ID card, Utility Bills (Water/Electricity Bills)
- Last 1 years’ bank statement
- Copy of Non-Collateral Overdraft, if any
- Copy of Business Incorporation
- Any other document required by the lender
